AOL Joins Chinese Venture

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AOL Joins Chinese Venture

America Online (AOL) on Monday announced a $200 million joint venture aimed at replicating its Internet service in China.

AOL will contribute $100 million to the Hong Kong-registered venture, which will be 51 percent owned by Legend Holdings (LGHLY), China's largest maker of personal computers.

For the immediate future the venture will be limited to providing technology consulting services to Legend's Internet portal, fm365.com, said Legend's president, Yang Yuanqing. But Yang said the venture also plans to start "a membership-based service like AOL's."

China doesn't allow foreign investment in companies that provide Internet access or content, but has promised to lift the restriction when it joins the World Trade Organization.

Gerald Levin, CEO of AOL Time Warner, said the deal was focused on technology and didn't involve any of the group's other media properties. "We will develop the most appropriate form of Internet service for China," he said.

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Microsoft's Arabian Nights: Egyptian Internet service provider LINKdotNET and Microsoft (MSFT) plan to launch an Arab Web portal called MSN Arabia based in Cairo and Dubai, executives said. The portal is scheduled to start public operations in September on Arabia.msn.com.

"We are going to work together to create MSN Arabia, which is an Arabic and English portal focused on the Middle East region," said LINKdotNET Chief Executive Khaled Bichara. "Our focus will be on this part of the world and, of course, on Arabs in the United States, Europe and Australia," he said.

Executives who signed the deal declined to give the total investment figure, but said operating expenses will amount to more than $10 million over the next four to five years. There are already 1.8 million Middle East users of Hotmail, the Egyptian company said.

Egypt aims to become a regional information technology hub after planning investments in "smart villages," or purpose-built high-tech business parks, and a "smart schools" initiative for computer education. The country so far has 500,000 to 600,000 Internet users, about 10 percent of them subscribers, Bichara estimated. Usage so far is restricted mainly by cost, but language and services are other factors, he said. "No matter how comfortable people here are with English, Arabic is still their native language.... If you really want to go to the masses, then English is not an option."

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Sony Bank's rocky debut: An Internet bank set up by Sony (SNE) opened for business but a glitch made it hard to get in the door.

The cause of the problem that made logging on to its two Web pages either impossible or very slow was under investigation but had not been solved by late afternoon, said Sony Bank spokeswoman Mari Teranishi.

In the first hour after opening, the bank received 13,570 viewers and 340 customers opened accounts, Teranishi said. The glitch hit shortly before noon.

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Microsoft-Hitachi alliance: Hitachi (HIT) said it had agreed with U.S. software giant Microsoft (MSFT) to jointly develop and market storage products in a bid to boost one of its fastest-growing businesses.

The two will set up a research facility next week in Tokyo to develop networks able to link disparate elements of a corporate database such as inventory, personnel and procurement and manage them as a single system.

The new system will use a Microsoft server and Hitachi's Sanrise storage products, which recorded sales of 240 billion yen ($1.99 billion) globally last year. Ikuo Kimura, general manager at Hitachi's storage area network systems solution division, said the new business would initially target corporate clients in Japan and aim for overseas markets later.

"Storage service providers have been good customers but we would like to target all-round clients," he said. The global storage market, which was worth $34 billion in 2000, is expected to grow to $39 billion this year and to $48 billion in 2003, Kimura added.

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Peregrine acquires Remedy: Software maker Peregrine Systems (PRGN) said it has agreed to acquire rival Remedy (RMDY) for $1.08 billion in stock and cash as it moves to expand its clientele to include small and medium-sized businesses.

The deal calls for Remedy shareholders to exchange each of their shares for $9 in cash and 0.9065 common share of Peregrine.

Peregrine Chairman and Chief Executive Steve Gardner said in a statement that the deal would allow his company to "serve a broader range of customers with an expanded line of products and development platforms."

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Sonera CEO resigns: Finnish telecom operator Sonera (SNRA) said its chief executive was resigning, just days after another executive said he was leaving the company.

The news of CEO and President Kaj-Erik Relander's resignation – effective August 1 – also comes amid reports of a takeover of the group by Sweden's Telia. Chairman Tapio Hintikka said in a statement Relander's decision to step down had been a "surprise." No reason for the resignation was given.

Aimo Eloholma, responsible for Sonera's Telecom business, would take over as acting president and CEO.